Major oil marketers will soon begin direct purchases of Premium Motor Spirit (PMS), commonly known as petrol, from the Dangote Petroleum Refinery as the Nigerian National Petroleum Company Limited (NNPCL) steps down from its role as the sole off-taker of fuel from the $20 billion facility. The shift is expected to occur between Thursday and next week, according to sources from both NNPC and the Major Energy Marketers Association of Nigeria (MEMAN).
Multiple sources confirmed on Tuesday that NNPCL will no longer be the exclusive buyer of petrol from Dangote, opening the door for other downstream oil players to directly procure products from the refinery.
There are also unconfirmed reports that the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA) has released new, higher petrol prices. However, NMDPRA’s spokesperson, George Ene-Ita, did not confirm these reports when contacted, nor did he respond to inquiries on the matter.
The withdrawal of NNPCL as the sole off-taker is seen by marketers as a signal that the Federal Government has effectively ended the petrol subsidy. In September the government was spending around N236 billion monthly to subsidize petrol imported through NNPC, as well as the product off-taken by the company from the Dangote Refinery. The daily subsidy on Dangote petrol alone was approximately N3.3 billion, which could total N99 billion per month. By stepping back as the sole buyer, NNPCL may save this expenditure.
The government had previously stated that NNPCL would be the exclusive off-taker of petrol from Dangote when the refinery began sales of PMS in September. It was also announced that starting from October 1, crude would be sold to Dangote in naira, and in exchange, Dangote would supply petrol and diesel to the domestic market, also to be paid for in naira.
A senior official from a major oil marketing firm confirmed that while marketers had yet to start directly purchasing petrol from Dangote, they had received the directive to do so. “It is now official that marketers can approach the refinery directly for petrol purchases,” the official said, adding that Dangote had not yet set a price for its fuel.
The withdrawal of NNPCL from its subsidized purchases means that petrol subsidies have effectively been removed. Dealers, however, have not yet adjusted their prices as they work through existing stock.
Another source within MEMAN confirmed that while marketers had been buying through NNPCL up until recently, the shift to direct purchases from Dangote is expected soon. The Managing Director of a major oil company also stated that direct purchases would likely begin next week, as the process takes time to fully implement.
A senior NNPCL official confirmed the company’s withdrawal as the sole off-taker, noting, “The prices of petrol will now be determined by market forces.”
Amid this development, the price of petrol is anticipated to rise. According to a new pricing template reportedly released by NMDPRA, the price of petrol could increase to N1,029.01 per litre in Abuja. Other cities are also expected to see hikes, with indicative pump prices ranging from N991.21 in Lagos to N1,059.39 in Maiduguri. These prices reflect the estimated cost without the NNPC’s previous subsidy, which covered differentials in pump prices across the country.
Dealers anticipate that once the petrol subsidy is fully removed, prices will rise further. Ukadike Chinedu, National Publicity Secretary of the Independent Petroleum Marketers Association of Nigeria (IPMAN), warned, “Nigerians should brace for this reality,” though he expressed hope that the sale of crude in naira could have a positive impact.